10-QPeriod: Q3 FY2003

NVIDIA CORP Quarterly Report for Q3 Ended Oct 27, 2002

Filed December 10, 2002For Securities:NVDA

Summary

NVIDIA Corporation's Form 10-Q for the period ending October 27, 2002, reveals a challenging quarter with a net loss of $48.6 million, a significant shift from the net income of $41.3 million in the same period last year. This loss is largely attributed to a substantial increase in operating expenses, particularly the $61.8 million recognized for a stock option exchange program. Despite the quarterly loss, the year-to-date (nine months) performance shows a net income of $39.9 million, down from $100.9 million in the prior year. Revenue for the nine months increased to $1.44 billion from $865.8 million, indicating top-line growth. The company maintains a solid liquidity position with $322.5 million in cash and cash equivalents and $589 million in marketable securities. However, investors should closely monitor the impact of the increased operating expenses and the strategic initiatives that led to the stock option exchange.

Key Highlights

  • 1The company reported a net loss of $48.6 million for the three months ended October 27, 2002, compared to a net income of $41.3 million in the prior year's quarter.
  • 2Revenue for the nine months ended October 27, 2002, increased significantly to $1.44 billion, up from $865.8 million in the same period last year.
  • 3Operating expenses more than doubled year-over-year for the quarter, reaching $158.3 million from $76.1 million, largely due to a $61.8 million stock option exchange expense.
  • 4Cash and cash equivalents stood at $322.5 million, and marketable securities at $589.0 million as of October 27, 2002, indicating strong liquidity.
  • 5The company has adopted new accounting standards SFAS No. 141 and SFAS No. 142, which impact the accounting for business combinations and goodwill.
  • 6Basic and diluted net loss per share for the quarter was $(0.32), a substantial decline from the $(0.32) and $0.24 earnings per share in the prior year's quarter, respectively.
  • 7Inventories decreased to $205.0 million from $213.9 million in the prior fiscal year-end, while accounts receivable increased slightly.

Frequently Asked Questions

The net loss of $48.6 million for the three months ended October 27, 2002, was primarily driven by a substantial increase in operating expenses, most notably a $61.8 million charge related to a stock option exchange program. This charge significantly impacted the quarterly results.

NVIDIA maintains a strong liquidity position. As of October 27, 2002, the company reported $322.5 million in cash and cash equivalents and $589.0 million in marketable securities, providing ample resources for operations and strategic initiatives.

NVIDIA has adopted SFAS No. 141 (Business Combinations) and SFAS No. 142 (Goodwill and Other Intangible Assets). The adoption of SFAS No. 142 means that NVIDIA has ceased amortizing goodwill, which would have been approximately $3.2 million for the quarter. The company now conducts annual goodwill impairment tests. This change affects how goodwill is accounted for on the balance sheet and can alter reported net income.

Compared to January 27, 2002, total current assets increased to $1.35 billion from $1.23 billion, driven by higher marketable securities and accounts receivable. Total current liabilities also increased to $444.1 million from $433.5 million, mainly due to higher accrued liabilities. Stockholders' equity saw a notable increase to $879.3 million from $763.8 million, reflecting retained earnings growth and additional paid-in capital.